US stocks fell on Friday as oil climbed toward its highest close in six months and investors weighed what a longer war with Iran would cost.
The Dow Jones Industrial Average dropped about 600 points. The move came one day after the Nasdaq 100 posted its worst session since June, falling 2.6% as spending plans from Tesla and Meta rattled the companies driving the artificial intelligence trade.
Oil is doing the damage
Brent crude rose nearly 4% to about $117 a barrel, not far from a wartime peak near $122. West Texas Intermediate moved back above $100.
"Oil appears to be the driver of Friday's market losses," said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute. Traders are positioning for the chance that fighting continues rather than ends soon, which keeps a risk premium in every barrel.
Chip stocks steady after a rough week
Semiconductor shares found a floor. The iShares Semiconductor ETF added about 1% after dropping 6% on Thursday. The sell-off was tied to worries about AI capital spending: investors are paying more attention to what data centre build-outs cost and how long returns take to arrive.
Tesla cut $5 billion from this year's spending plan and told investors the bill will rise from here. Meta also reported heavy infrastructure costs. When the largest buyers of chips and servers signal caution, the whole supply chain feels it.
Two events next week
Big Tech earnings and the Federal Reserve's rate decision both land next week. The Fed is expected to hold rates steady on Wednesday. Futures markets put the odds of a December hike at roughly 71%, a level that keeps pressure on stocks priced for future profits.
For now the market has two forces pulling against each other: falling confidence in AI spending, and rising energy costs that make everything else more expensive.